Student Newspaper of the College of the Holy Cross

Universal Basic Income: A viable welfare replacement?

Universal basic income has gained traction in recent years. Elon Musk, Bill Gates, and other extremely wealthy entrepreneurs are concerned that the rapid influx of automated labor will render essentially obsolete lower skilled jobs. While all entrepreneurs do not agree how best to address the potential problem of mass joblessness, universal basic income, or UBI for short, is one proposed solution. The idea, while similar to modern Western European socialist programs, is not exactly new. Adam Smith, the father of capitalism, proposed an asset-based egalitarian program that is roughly the 18th century version of modern UBI.

What makes UBI fascinating from a philosophical perspective is how it seems to bridge the ideological gap between two vastly disparate economic systems; namely, capitalism and communism. A hypothetical society that uses the UBI as the main form of social welfare essentially admits that labor-eliminating technology will be free to expand unabated. This lack of regulation is the hallmark capitalist feature of the UBI program. Countering this, however, is the fact that UBI is a clear cash handout system, more communist in nature than anything present in the modern United States welfare system today. The strangest aspect of the traditional UBI proposal is that everyone, no matter their level of wealth, receives the same cash handout. In other terms, a millionaire and an unemployed single mother will receive the same stipend from the government.

With some the details of UBI laid out, it is appropriate to investigate whether, in theory, such a system could work in the United States. Proponents of UBI from both sides of the political spectrum speculate that UBI necessarily grows the economy. With rather stagnant growth in the last five years alongside a Federal Reserve who is afraid to nudge the interest rates above zero bound, a plan that proposes to grow the economy should at least be considered. Proponents also argue that Americans should not view the UBI program as extreme, since most proposals entail a drastic reduction, if not elimination, of the current social safety net. Taken together, proponents sell the system as a growth oriented program that lifts all above the poverty level.

With this tantalizing promise in mind, one needs to consider the critics’ objections to a system that provides a pile of cash to all citizens. Namely, can a society count on UBI to promote growth if enough individuals squander the money they are given? This is not to imply that there is a certain class of persons that would be prone to this behavior. Middle class and upper class citizens may use the money to fund a foreign vacation, while those in the lower classes may simply be needing more of the basic goods they were already purchasing. While money spent for non-durable goods is better than putting the money under one’s mattress, this type of spending is not typically considered a catalyst for major GDP growth.

Taken altogether, UBI requires a good deal of optimism. Charles Murray, a libertarian sociologist, believes that UBI would foster community cooperation that was lost at the outset of the modern welfare system. Community cooperation is a laudable goal, but it is not something that is resurrected overnight. Beyond the optimism that is needed to implement UBI in the U.S., it is worth noting how impossible it would be to pass through the current Congress. One side would argue that the nominal amount was not enough to sustain a family. The other side would be horrified by the thought of providing money to people without having to prove extenuating circumstances are preventing them from making a living. Switzerland struck down the referendum on implementing a UBI system in 2016 by a 77 percent to 23 percent margin. This does not bode well for anything like it being passed in the U.S. Perhaps those who have shared dystopian views about the country’s economic future are partially right; It will take something like mass unemployment and gross inequality to motivate society to even seriously consider a non-traditional solution.